Hard road for foreign travel agencies in China

Even though the golden age of Chinese outbound tourism has begun, strict legislation still limits any effort by non-Chinese companies to take advantage of this market from inside mainland China.

This is in spite of the small steps that Beijing has taken over the years to meet the requirements of the World Trade Organization (WTO).

INBOUND TRAVEL AGENCY MARKET IS OPEN - The Travel Agency Regulations came into effect in 2009 to address this topic; it was later complemented by the Tourism Law of the People’s Republic of China in 2013. Concerning inbound tourism, legal requirements and duties differentiations between local and foreign agencies are fallen within the recent laws.

Instead, for what concerns the outbound market, as a general thing pointed out by China Blawg, “tourism business is restricted to travel agencies established for at least two years that have not been found to have infringed on the legal rights and interests of tourists.” Here ends the commitments shared between Chinese agencies and outsiders.

Infractions will result in the requisition of all income but it doesn’t end here: if the illegal profit is more than ?100,000, a fine of up to five times the illegal income can be inflicted. If it is lower, the fine will range between ?100,000 and ?500,000. In the worst-case scenario, the government can revoke the travel agency’s business permit.

THE NARROW PATH - Such measures compromise the chance for foreign investors to operate in the Chinese outbound market, at least for agencies fully controlled by outsiders. The only way to get around this seems to be setting up a joint venture with a Chinese partner (there are no limits on shareholding), and not necessarily with a Chinese travel agency, “although it is better to partner with Chinese travel agency, of course.”